A gay jenson farms co v cargill inc
A. Gay Jenson Farms Co. v. Cargill, Inc.,
Facts
Ps were 86 individual farming entities. Ps sued Cargill (D) and Warren Seed (D1) to recover losses sustained when D1 defaulted on the contracts made by Ps for the sale of grain. P got the judgment and D appealed. D1 operated a grain elevator and was involved in the purchase of grain from local farmers. The grain would then be resold through a grain exchange or to terminal grain companies directly. D1 also stored grain, sold chemicals, fertilizer, and steel storage bins. D1 also operated a seed business. D1 decided to apply for financing from D. It was recommended by management that D finance D1. D and D1 established a line of credit for $, In return for this line of credit, D1 appointed D its grain agent for transaction with the Commodity Credit Corporation. D1 was given the right of first refusal to purchase grain sold by D1 to the terminal market. A new contract was negotiated three years later for a $, line of credit but also stated that D1 would provide D with annual financial statements, or an audit would be conducted, or D wo
Corporations Cases
- A. Gay Jenson Farms Co. v. Cargill, Inc., Supreme Court of Minnesota, N.W.2d ()
- Warren Grain & Seed Co. wanted to expand its business, so it sought financing from Cargill, Inc. Cargill wanted to obtain a provider of market grain for its business, so it gave Warren an unseal line of credit with a maximum first at $,, then at $,, and so on up to $1,, It became evident that Warren had financial problems, so Cargill conditioned credit on its permission for certain activities; sent a manager to help make business decisions at Warren; required periodic checks on the Warren business; and stated that Warren needed paternal guidance. When Warren ceased operations and defaulted on grain sale contracts, 86 farmers sued Warren and Cargill, claiming an agent/principal affair . Held Cargill is liable for the grain contracts because Warren was an agent for Cargill as to purchase, storage, and sale of seed grain. Restatement (Second) of Agency § 14 O () states that a security holder who "takes over [de facto] management of the debtor's business either in person or t
Reasoning and Analysis
The case turned on whether Cargill&#;s relationship with Warren constituted an agency relationship, showing Cargill liable as a principal for Warren&#;s contractual obligations. The court scrutinized numerous factors indicating Cargill&#;s control over Warren, such as financing operations, influencing management decisions, having a right of first refusal on grain sales, and requiring approval for significant business transactions.
The court also considered past dealings where Warren acted as an agent for Cargill in separate projects, bolstering the argument that Warren operated under Cargill&#;s direction. The court differentiated this affair from a representative creditor-debtor scenario, highlighting the depth of Cargill&#;s involvement in Warren&#;s daily operations and decision-making processes.
Ultimately, it was concluded that Cargill&#;s &#;paternalistic&#; approach and significant financial support went beyond lending and into the realm of control and agency, thus establishing liability for Warren&#;s defaults.
Conclusion
The Supreme Court o
A. Gay Jenson Farms Co. v. Cargill, Inc.
Business Associations, Pages 14–19
Supreme Court of Minnesota,
Facts:
Defendant Warren, a company running a grain elevator, was in financial trouble and applied for financing from defendant Cargill. Cargill agreed to loan Warren up to $, to pay its bills. In return, Warren agreed to give its sales proceeds to Cargill, Cargill was made its grain agent with the Commodity Credit Corporation, and Cargill was given a right of first refusal to purchase market grain sold by Warren.
A few years later, Warren's credit line was extended to $, and Cargill began to keep the books for Warren. Warren also agreed not to spend over $5, on improvements nor to take on another's debt or sell stock without Cargill's permission. As time went on, Cargill would tell Warren to make improvements or to act as its spook for new types of plants.
Cargill increased Warren's limit to $ million, while Cargill ended up sending 90% of its cash grain to Cargill. Warren continued to go further into debt, and Cargill asserted more rights to the use of the money. Finall